A Weekly 35% Price Increase in BTC Wakes up the Market: A Data Perspective by IntoTheBlock
Trading Analysis

A Weekly 35% Price Increase in BTC Wakes up the Market: A Data Perspective by IntoTheBlock

Created 5mo ago, last updated 2mo ago

This week, IntoTheBlock takes a look at what's going on in the Bitcoin markets.

A Weekly 35% Price Increase in BTC Wakes up the Market: A Data Perspective by IntoTheBlock

Table of Contents

Every week, IntoTheBlock brings you on-chain analysis of top news stories in the crypto space. Leveraging blockchain’s public nature, IntoTheBlock’s machine learning algorithms extract key data that provide a deeper dive into the major developments in the industry. 

A Weekly 35% Price Increase in BTC Wakes Up the Market

A concentration of bullish news has hit the market this week with major tech companies like Amazon posting a job offer searching for a blockchain expert, or Robinhood looking at DeFi services. Also the e-commerce giant, Shopify, has enabled NFT sales in his platform
Speaking of NFTs, they are again on everyone's lips and more and more popular artists are deciding to get their feet wet with them. Play-to-earn NFT game giant Axie Infinity is revolutionizing the sector, achieving revenues never seen before in the DeFi ecosystem. It has also been received positively by traders and regulators alike that this week major exchanges are pushing forward to protect their clients by reducing the amount of maximum leverage available
The crypto space has digested these bullish news with a very positive sentiment and the market has reacted accordingly. A sudden trading volume rise during the Sunday night futures market made Bitcoin rise quickly by 15% and retest the $40K resistance level. Since being faced with this psychological resistance, the price has backed down towards the $37K level and is headed to face the $40K again. 

This weekly price range increase accounts for a 35% rise, something that not many investors expected a week ago when BTC was trading under the $30K level for a whole week. This price rise has resulted in a notorious increase of the Bitcoin market cap over other altcoins. This dominance now is at around 50%, the highest level since the start of May of this year.

The impact that the recent price move has caused over the market can be better understood by analyzing on-chain and derivatives market data. 

For example, last week we stated that our global in/out of the money indicator was showing that only 66% of the total addresses holding BTC were in profit, and this has changed. Now around 83% of total addresses are in profit, which is a considerable relief of selling pressure, as investors are willing to not sell when they are in profit. For an extended explanation on why this happens, it is worth reading this article explaining the behavioral economics perspective behind it.
As of July 29 using IntoTheBlock’s Bitcoin Global In/Out of the Money indicator.

Expanding on these metrics, we can obtain theoretical support and resistance levels based on on-chain data from our In/Out of the Money Around Price indicator (IOMAP). The data shows that around 72% of the total purchased BTC has an average break even price at the $37,300 mark, hinting that price could serve as a support and stay around that level:

As of July 29 using IntoTheBlock’s Bitcoin In/Out of the Money Around Price.

This indicator splits the price into 15% ranges and shows the amount of Bitcoin that was bought in each range. We can see that there is a big volume of 69% Bitcoin that was bought below the current price, and a fair amount of them (around 420K BTC) that were purchased between the $38.3K and $39.5K range. 

Moving on to the futures markets, we can measure market sentiment with indicators that show how traders are positioned. In this case, the funding rate of the major perpetual futures exchanges have stopped being negative for the first time in over a month.

As of July 29 using IntoTheBlock’s Bitcoin Funding rate indicator.

A consolidation of several days of funding rates staying above 0.00% would be a solid bullish sign, because this would mean that the majority of open positions on the perpetual markets are consolidated on betting long on Bitcoin and have to pay the funding fee to the short positions willing to bet bearish on the Bitcoin price. 

If we look at perpetual futures volume, it is clear that the market is returning to gain serious volume. On July 26, we saw a total of $128B traded, doubling or tripling the daily amounts that were traded during this month. Which is something considerable remembering that on average BTC has a seasonal pattern similar to the traditional finance markets, where less volume is traded in the summer months.

As of July 29 using IntoTheBlock’s Bitcoin Perpetual futures daily traded volume indicator.

Even though we have not spotted clear confirmation of bullish indicators yet, the market has started to gain back some of its volume and wake up traders that were inactive after the weak volumes seen this past month. The farewell to the $30K price level and an accumulation of positive news has made the market optimistic. Our eyes are fixed on the current price level, where a breakout of the $40-$43K level as our IOMAP indicator shows, would be key in reactivating a bullish landscape.

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